CEO overconfidence and CSR decoupling

By Steve Sauerwald, W. Su. Corporate governance: An International Review, 2019

216 citations recorded by the source corpus.

Research question/issue. This study examines whether there is decoupling between how firms communicate about corporate social responsibility (CSR) and what firms do in terms of CSR. We argue that this CSR decoupling is driven by the CEOs' cognitive biases. Specifically, we propose that overconfident CEOs increase CSR decoupling. Research findings/insights. We tested our arguments in a sample of S&P 500 firms for the period of 2006–2014. We find that CEO overconfidence is positively related to the decoupling between the optimistic tone of CSR reporting and the firm's actual corporate social performance. However, the board of directors mitigates the effect of CEO overconfidence on CSR decoupling when outside directors have CSR expertise and ownership incentives. Theoretical/academic implications. Previous studies have suggested that CSR decoupling is a function of opportunistic management that can be constrained by external monitoring. We examine CSR decoupling as a function of cognitive biases (such as overconfidence) that can be constrained by internal monitoring. Practitioner/policy implications. This study provides insights into the conditions when CSR information released by the firm is symbolic. Practitioners may prevent such symbolic CSR reporting by imposing effective oversight by the board of directors.

Subfields: Accounting, Marketing, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/477b01e8d3bced2d9f25e7d9181193841d8901ab

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Accounting

1. Isabel‐María García‐Sánchez
2. Jennifer Martínez‐Ferrero
3. S. Khan
4. Nazim Hussain

In Marketing

1. Jennifer Martínez‐Ferrero
2. Isabel‐María García‐Sánchez
3. S. Khan
4. Nazim Hussain

In Strategy and Management

1. Jennifer Martínez‐Ferrero
2. Isabel‐María García‐Sánchez
3. S. Khan
4. Nazim Hussain
5. Patrick Velte
6. A. Gerged

Citations in the corpus

• Do Markets Punish or Reward Corporate Social Responsibility Decoupling? (2020, background): “In line with the idea of Sauerwald and Su (2019) and Tashman and colleagues (2019), this is referred to as CSR decoupling.”